KUALA LUMPUR (Aug 25): Sime Darby Bhd is confident in prospects for its motor division, but remains vigilant on the possible impact of external factors, according to its group chief executive officer (CEO) Datuk Jeffri Salim Davidson.
In a virtual media briefing today, Jeffri highlighted that demand for motor cars will remain despite the travel restrictions imposed in various countries, adding that the extension of the sales and service tax (SST) exemption until year end will help to support sales.
“It also depends on the Covid-19 situation. We have seen some shutdowns recently in Auckland, Wellington and, obviously, this will impact our sales.
“It also partly depends on the supply situation as currently car manufacturers are facing a global microchip shortage.
“Whether we see the same level of volume as we did this year, I still think that there are quite a lot of opportunities for us,” he said.
Earlier today, the group announced that its net profit for the fourth quarter ended June 30, 2021 (4QFY21) improved 19.2% to RM211 million from RM177 million a year ago.
The company attributed the improved earnings to the strong performance of its motor division.
It also declared a second interim dividend of eight sen per share and a special dividend of one sen per share for 4QFY21.
For perspective, the group’s motor division has always been its biggest revenue contributor, recording a healthy contribution of RM1.05 billion in FY21.
Jeffri added that uncertainty will remain the key threat for the upcoming year, but said the group remains upbeat about its prospects, especially in the industrial segment.
“Commodity prices have picked up tremendously; thermal coal and even oil prices are beginning to move up.
“So that is going to drive coal mining in our territories in Queensland and push demand for our products. I think there’ll be momentum on that,” he stressed.
On the listing of the group's healthcare unit Ramsay Sime Darby Health Care Sdn Bhd, Jeffri said it is still on the cards, but did not divulge the timeline of the listing.
“I think it’s probably too early to talk about valuations, and valuations depend on the timing [of the listing],” he said when asked about the valuation of the healthcare arm.
Meanwhile, on mergers and acquisitions (M&A), Jeffri said the group is not looking for any potential deals at the moment.
He also highlighted the group’s plans to dispose of its non-core assets.
“There are discussions happening, and whether it will be completed and therefore book profits in FY22, it is difficult to say.
“But certainly there are other assets that we are looking at as part of our non-core rationalisation exercise,” Jeffri added.
At the time of writing today, shares in Sime Darby traded three sen or 1.33% higher at RM2.28, giving it a market capitalisation of RM15.51 billion.